Carlsberg Rises as RBC Sees Room for Rebound: Copenhagen Mover

June 19 (Bloomberg) -- Carlsberg A/S rose the most among
Copenhagen’s benchmark stocks today after RBC Capital Markets
said the brewer will rebound after underperforming its peers.

Carlsberg advanced as much as 2.6 percent, the most since
May 8. The stock was up 1.6 percent at 525.5 kroner as of 10:31
a.m. in the Danish capital, the biggest advance among stocks on
the Nasdaq OMX Copenhagen 20 Index. Trading volume in the
company’s shares was more than 37 percent of the three-month
daily average.

Before today, Carlsberg shares lost 6.7 percent this year
compared with a 4.7 percent gain in the Stoxx 600 Food and
Beverage Index, on investor concern that sales in Russia, its
biggest market, are shrinking. RBC today raised its
recommendation to outperform from sector perform, saying the
stock is trading at a discount to other listed breweries.

“We believe that underperformance of this magnitude has
thrown up an opportunity,” James Edwardes Jones, a London-based
analyst with RBC, said in a note. “The outlook for Carlsberg is
becoming less opaque, though still challenging.” RBC raised its
12-month price target for the stock to 640 kroner from 630
kroner.

Carlsberg, based in Copenhagen, on May 7 reported first-quarter profit that beat analyst estimates and said it won
market share in Russia amid declining beer sales.

“The Russian beer market has been adversely affected over
a number of years by government initiatives to reduce alcohol
consumption in the form of excise duty increases,” Jones said.
“We believe that the regulatory environment is showing signs of
stabilising and scheduled excise duty increases, while still
likely to result in retail price rises in real terms, should
continue to moderate.”

Nordea Markets today said in a note that it also sees
Carlsberg as “cheaply priced,” and said there’s a “large
turnaround potential” for the brewery in Russia. Nordea’s
Copenhagen-based analysts have a buy recommendation on the
stock.